Buying your first home can be an eye-opening experience in terms of encountering unfamiliar documents and forms. Fortunately, working with a qualified buyer’s agent makes it much easier to wade through the paperwork, understand the lingo, and successfully reach the closing table.
After closing on your home, don’t be surprised if confusing and unsolicited correspondence related to your purchase starts arriving in your mailbox—or by email, phone, or text. Examine these inquiries cautiously, staying alert for potential scams!
What sets the wheels in motion?
After your purchase closes, the title company files the deed on your property with local government authorities, recording a change in ownership. Once this happens, your name and address become publicly-accessible information.
Con artists rely on this information to execute various scams. Additionally, they may be trolling online social media posts or hacking into email accounts, searching for clues of upcoming or recently completed home purchases.
Any related details or contact information can help execute their schemes, including real estate wire fraud, which targets about-to-close homebuyers and aims to strip them of everything they’ve saved to purchase a home.
Five Homeowner-Related Schemes
Con artists rely on tricking people into parting with their money or revealing sensitive personal information. Some scams are easy to spot, while others are more clever. Homeowners, in particular, should be wary of:
1. Fake utility bills. A new homeowner is threatened that their electricity (or other essential utility) will be shut off unless a payment is made immediately.
If you’re in any doubt about the status of your account, look up the provider’s phone number and speak to a customer service representative.
2. Mortgage protection insurance. Similar to life insurance, mortgage protection insurance is designed to help a family stay in their home if a homeowner dies, by paying off the mortgage.
Legitimate companies offer this product, but scammers also attempt to scare homeowners into buying fake policies.
3. Mortgage payment administration. Some companies offer to help homeowners pay off their mortgage faster by sending bi-monthly payments to an intermediary (and tacking on substantial administration fees).
If you want to accelerate your mortgage payments, make direct arrangements with your lender.
4. Property tax payments. Scammers send a letter or place a call, threatening that you’ll lose your home if you don’t immediately pay overdue property taxes.
Real estate taxes are typically calculated at closing (prorated between the buyer and the seller) and included in your monthly escrow payments. To verify your status, contact your local tax authority.
5. Home warranties. Many legitimate companies offer home warranties, which can help new homeowners protect themselves, in case a significant problem was overlooked during the inspection. Scammers, however, may attempt to sell fake policies to unsuspecting buyers.
Note that several of these schemes aren’t limited to new homeowners.
In the U.S., the Federal Trade Commission (FTC) takes a leading role in collecting all types of complaints from consumers and sharing details with appropriate law enforcement agencies. Contact them at 877-FTC-HELP (382-4357) or ftccomplaintassistant.gov.
Scams perpetrated by mail are considered mail fraud and can be reported to the U.S. Postal Service at 800-372-8347 or postalinspectors.uspis.gov.